Investment Strategy

NOVA Green Energy is an open-end mutual fund of qualified investors (hereinafter only “Fund”) investing in equity of companies operating small and medium facilities (1-4 MW) that generate power from renewable sources of energy in the Central and Eastern Europe, particularly in the Czech Republic and Slovakia.

The yield of the Fund is steady because it’s based on feed-in tariffs of electricity for a period of 15 – 20 years; moreover these prices exceed a common market electricity price. Those factors together with effective asset management reflect in economic result of the Fund. Thus, this type of investment resembles in terms of risk government bonds with 10 – 15 year maturity; however the yield is significantly higher than 6% p.a.

The Fund aims to be the best option for conservative investors expecting stable government guaranteed income and adequate capital appreciation in the area of renewable sources. Strict regulation framework, clearly set management motivation, a respected fund manager, expert and auditor as well as other institutional and project guarantees ensure maximum transparency of NOVA Green Energy, open-end mutual fund, following the model of Western Europe investment funds.

Green energy

Who is the Fund designed for?

This Fund with medium and long time-horizon is designed for institutional and private investors looking for capital appreciation around 6+% p.a. Investing in the Fund means that an investor buys a share of the Fund. Continuous investment appreciation shows in terms of increased value a unit certificate. The Fund’s yield is not paid continuously in a dividend form, however every shareholder may under certain conditions request a partial redemption (buy back) of its unit certificates. The capital gains are then successfully, in accordance with the investment strategy, reinvested, and in this manner the certificate units of every investor are appreciated.

What type of institutions is the investment suitable for?

The investment in the fund with medium and long time-horizon is designed for institutional investors with strictly defined requirements regarding the liquidity of assets invested, such as insurance and pension schemes.

At the same time, the Fund is an open-end mutual fund of qualified investors. Thus, the investment is highly secure because as any other open-end mutual fund on the Czech market it has to comply with all legal requirements and rules, in particular Act No. 240/2013 Coll., on Investment Companies and Investment Funds.

Our Investors

The spectrum of investors consist of institutional investors, such as Czech and foreign banks, insurance companies and securities dealers as well as individuals, in particular managers of multinational companies and Czech entrepreneurs.

How to Invest

Individual Investors

The investment in the Fund is exclusively intended for persons matching the definition of a qualified investor in compliance with Act No. 240/2013 Coll., on Investment Companies and Investment Funds, therefore it is necessary to invest at least 125,000 EUR (3,500,000 CZK) and sign a Declaration of Risk Awareness concerning this type of investment and including investment experience.

Subsequently, the investor wishing to make investments fill out the following documents with the fund manager:
+ Agreement on Subscription/Redemption of Unit Certificates
+ Request for Issuance of Unit Certificates
+ Declaration of Risk Awareness
+ Anti-Money Laundering (AML) Form
+ FATCA documents

Institutional Investors, asset managers and similar financial institutions

You will need to fill out a few subscription documents:

  • Agreement on Subscription/Redemption of Unit Certificates
  • Request for Issuance of Unit Certificates
  • FATCA documents
  • Official list of authorized persons entitled to sign these documents on behalf of the institution/client
  • A copy of documents (e.g. your licence or similar document) that proves that your institution can be considered the professional investor

We will need hard copies of these documents from you by mail. To accelerate the process, please send us scan copies by e-mail while the hard copies are delivered to us.

Issuance/Redemption of Unit Certificates

The fund issues registered unit certificates at the nominal value of 0.1 EUR or 1 CZK.
The redemption of unit certificates is ongoing throughout a year process and the redemption periods by the investment company are set according to the size of required redemption amount. In case of the investment up to 10 million CZK the period is maximum 4 months from the end of the month in which the investment company received the request for redemption. In the period starting from the delivery of the request until the redemption of unit certificates, the unit certificates do not bear any interest.
The investment into the Fund is not time limited. The minimum recommended investment horizon is 3 years.

Fund Parameters

Fund type Open-end mutual qualified investors fund
Fund focus/objective Renewable sources of energy ; corporate bonds
Private equity in medium-sized companies engaged in business of renewable energy; corporate bonds of prosperous companies
ISIN CZK class CZ 000 847 46 73
ISIN EUR class CZ 000 847 40 53
Net Asset Yield 2014 7.71 % p.a.
Net Asset Yield 2015 8.25 % p.a.
Net Asset Yield 2016 5.36 % p.a.
Fund Capacity 170 million EUR
Fund size as of June 30, 2017 44.64 million EUR
Issuance Monthly
Issued security Dematerialized registered unit certificates at nominal value of 0,1 EUR or 1 CZK
IRR 6+% p.a.
Fund duration Since January 2013 for an indefinite period
Minimal investment Minimum initial investment for every single investor of the Sub-fund amounts to EUR 125,000 or CZK 1,000,000 (equivalent 40,000 EUR) after performing a suitability test under Section 15 ZPKT
Recommended investment horizon 3+ years
Entry fee max. 3 % for investments up to 250,000 EUR / 7,500,000 CZK, otherwise 0 %
Exit fee 0%
Fund manager REDSIDE, Fund Management
Total annual costs Max. 1.95 % from NAV of the Fund
Performance fee 30 % from annual yield over 10% IRR
Depository UniCredit Bank
Auditor PriceWaterhouseCoopers Audit
Supervisory authority Czech National Bank
Law and accounting system Czech Republic
Taxation 5 % from profit

Fund Management

The fund is managed by REDSIDE Fund Management, which was pursuant to Act 240/2013 Coll., on Investment Companies and Investment Funds granted the licence by the Czech National Bank to perform management and administration of investment funds. REDSIDE focus consists in providing professional management of qualified investors’ funds, including establishment of separate fund structures and their subsequent management and administration. The size of Assets Under Management (AUM) exceeded 200 million EUR in May 2016.

REDSIDE was founded as a result of joint business engagement of two companies i.e. ASB and Arca Capital. ASB Group was established in 2002 and it provides a wide range of services including administration support, accounting, reporting, tax advisory and trust management in Central and Eastern Europe. Its offices with more than 110 employees are located in Prague, Warsaw and Bratislava. Among ASB’s clients belong companies, such as Standard Life Savings, AVIVA fund, Pradera, Pramerica Real Estate Investors etc..)

Arca Capital and REDSIDE created a strong and experienced team providing top quality services in the area of fund management.

The selection process of assets is carried out by experienced team of experts from the investment group Arca Capital. Arca Capital is a dynamic group, a type of holding that has been engaged in private equity business and the provision of financial services for more than 15 years in CEE region. The asset volume exceeded 1.4 billion EUR in July 2017. The group has a clearly defined investment strategy targeting investments that generate long-term and sustainable revenues. Its investments mostly involve energy, real estate including development, fast-moving consumer goods (CFMG) and new technologies.

Information duty

Performance

Fund’s yield matches long-term average levels achieved on the stock markets without the correlation with financial market volatility.

Net appreciation (audited) for 2014: 7.71 % p.a.

Net appreciation (audited) for 2015: 8.25 % p.a.

Net appreciation (audited) for 2016: 5.36 % p.a.

Performance in June 2017:

1 month: 0.39 %
3 months: 1.02 %
6 months: 2.14 %
1 year: 4.81 %
2 years: 11.54 %
Since inception 06/2013: 28.60 %
YTD: 2.14 %

Fees

  • Entry fee - maximum 3 % for investments up to 250,000 EUR (7.5 million CZK), 0 % fee over 250,000 EUR
  • Exit fee 0 %

The purchase of unit certificates by individuals (natural) and legal persons is most often carried out through so called “direct investment”. Direct investment means that the investor sends financial means directly to the Fund’s account maintained by its depository and subsequently unit certificates are credited to its asset account maintained by one of the participants of the Central Securities Depository (CSD) at an aliquot value. In case the investor has no property account at its disposal, the services of fund’s manager may be used in terms of account setting and the completion of the entire transaction.

In the first place, any investor interested in investing should read the information available about the Fund and its investment profile.

Government Security

The Fund is governed pursuant to Act No. 240/2013 Coll., on Investment Companies and Investment Funds and Act No. 256/2004 Coll., on Business Activities on the Capital Market. The compliance with the legislation and particular statutes is supervised by the Czech National Bank.

All investments are overseen by the Fund’s Investment Committee. In addition, the Fund is regulated by the Czech National Bank and the investments are under constant supervision of the financing banks.

Project Security

  1. Investments and divestments of the Fund are approved by the Board of the investment company, after being consulted with the Fund’s Investment Committee which makes recommendations.
  2. Asset revenues in the Fund’s portfolio are related to the long-term, government guaranteed electricity feed-in tariffs from renewable energy sources.
  3. Performance of assets in the portfolio is permanently monitored by the Fund’s Management as well as the financing banks.
  4. Assets are located only in the countries with a stable regulatory framework.
  5. Portfolio’s assets are secured through long term warranties for the components from renowned contractors.
  6. The Fund invests exclusively in reliable and tested technology.
  7. Portfolio’s assets have long-term operation contracts with suppliers, where the minimum power output is defined together with strict financial penalties.
  8. All assets are insured in case of generation power failure.
  9. The Fund diversifies its risks via investing in various types of renewable energy projects.
  10. The Fund has a balanced portfolio in terms of CZK and EUR asset structure.

Government Guarantees

Supervision: Czech National Bank (CNB) Fund manager provides monthly report to the CNB on fund’s asset structure including accounts.
Manager: REDSIDE Fund Management Was granted a licence by the CNB to perform management and administration of investment funds. The size of managed assets exceeded 200 million EUR in 2016.
Depository: UniCredit bank Czech Republic and Slovakia, a.s. Monitors, performs and reports money transaction in compliance with the law and fund’s statute.
Auditor: PricewaterhouseCoopers Audit, s.r.o. Conducts an audit of financial statements and fund’s annual report once a year.
Asset Valuation Officer: from CNB list Revaluation of the fund is carried out by an Asset Valuation Officer from CNB list independent of the investment company at least once a year.

More information on security through legislation/government guarantees

  1. Supervision: The Fund is supervised by the Czech National Bank. The Fund is managed by REDSIDE company, which provides CNB (Czech National Bank) with monthly reports on fund’s asset structure including accounts. In addition, it sends on regular basis quarterly reports to European Securities and Market Authority, which involves, above all, setting of internal control mechanisms and risk management.
  2. Professional management of the Fund: the Fund is managed by REDSIDE, Fund Management, which has been granted the licence by the Czech National Bank to perform management and administration of investments funds pursuant to Act No. 240/2013 Coll., on Investment Companies and Investment Funds.
  3. Depository: The Fund’s manager is unable to carry out any transactions with Fund’s financial means. The property of the Fund is in custody of a depository – a bank with a special licence. Not even the depository is allowed to freely use the Fund’s means (lend, pledge etc.). This property is kept on a special account that does not follow standard performance of bank’s operation. The depository also monitors whether the Fund is managed with professional and in compliance with the law and the Statute of the Fund. The main role of the depository consists in checking whether the unit certificates are issued properly and redeemed (bought back) pursuant to the law and Fund’s Statute, whether the value of the unit certificate is calculated in compliance with the law and statute, the way Fund’s asset valuation is carried out and whether the assets have been acquired in compliance with the law, including checks on incoming and outgoing payments. The depository of the Fund is UniCredit Bank, a.s.
  4. Separation of Fund’s assets from investment company assets (China Wall): The assets of the company are separated from the investment company assets. Provided the investment company would go bankrupt, the assets remains unaffected and are transferred under the management of another company.
  5. Audit: Once a year, an audit of the Fund is carried out by PriceWaterhouseCoopers, which audits financial statements as well as the annual report of the Fund.
  6. Asset revaluation: Pursuant to the effective legislation, Act No. 240/2013 Coll., on Investment Companies and Investment Funds and the Statute of the Fund, the Fund is obliged to revalue its assets. The revaluation takes place at least once a year independent of the investment company and is carried out by a valuation officer from CNB approved list.
  7. Investment limits: The Fund has to adhere to the limits laid down by the law and Fund’s Statute. That is to prevent the risk of loss as a result of investing great volumes of financial means into one asset. The Fund is obliged to follow the legally binding investment limit per asset value of the Fund up to maximum 35 % of total fund capital. Fund manager: The Fund manager REDSIDE, Fund Management cooperates with the investment group Arca Capital in the area of portfolio management.
  8. Fund Manager: Fund Manager REDSIDE Investment Company cooperates with the investment group Arca Capital in the field of portfolio management.

Information for Investors

Each investor receives information on the price of unit certificate from the fund manager, REDSIDE company on monthly basis. In addition, the Fund publishes regular monthly reports on its website containing information on the Fund, including its size and performance.

The Fund in terms of diversification acquires various renewable energy assets in the region of CEE, thus spreading the risk.

The Fund may invest into the following facilities:
+ Photovoltaic plants
+ Wind farms
+ Small hydro power plants
+ Waste-to-energy facilities

+ Combined heat and power production (cogeneration)
+ Biogas power plants
+ Biomass facilities
+ Energy funds

FAQ (Frequently Asked Questions)

1. Can a bank invest as a nominee?

Yes. You must however make sure and confirm to Redside that the ultimate buyer is aware that the Nova Green Energy fund is a fund for qualified investors, i.e. governed by a specific law and with the minimum investment threshold as set out by the Czech law.

Investors must in compliance with Czech legislation fill in subscription documentations as follows:

a) Agreement on issuance and redemption of units of qualified investor funds;
b) Request for the issuance of investment certificates;
c) Affidavit of the Investor of the Qualified Investors Fund (not necessary for the professional clients, i.e. banks, funds etc.);
d) AML documentation (not necessary for the professional clients, i.e. banks, funds, etc.);
e) Questionnaire regarding investment skills (not necessary for the professional clients, i.e. banks, funds).

The Central Register kept by Central Securities Depository Prague participants records all registered securities issued in the Czech Republic, including that of Nova Green Energy Fund. The Central Register is a two-stage register composed of a register kept by the Central Securities Depository and the follow-up records maintained by the so-called CSD Prague participants, i.e. especially securities trading participants.

On the base on above mentioned please take into account that we are able to settle the transaction only if your client has so called asset account with one of the Central Securities Depository Prague participants.

See list of Participants here:

http://www.cdcp.cz/index.php/en/participants-list

2. What's the NAV frequency?

Monthly.

3. What's the Deadline for subscription/redemption?

There is no deadline, really. A subscription order may be submitted in person at the Investment Company, send via mail (info@redsidefunds.com) or via fax (+420 224 931 368). Shares of the Fund are subscribed for the actual value of share announced always for the period, in which the so-called decisive date occurs, that is the day for subscription of financial means remitted by the fund-holder to the account of the Fund (see more details in prospectus of the fund).

The actual value of the unit is determined always as of the last day of the calendar month with validity for the following month, i.e. for September 2016 from the first date of September until the last date of the month. The actual value of the unit of the Fund is determined within 10 business days of the following month, in our example October (upon monthly financial review, as prescribed by the regulator). The actual value of the unit of the Fund is announced within next 15 business days then after.

As far as redemption goes, it is always handled with regard to the overall investment. In short, with investments up to 10 million CZK = approx. 400,000 EUR are redeemed within 4 months. Investments from 10 million CZK to30 million CZK (400,000 - 1,200,000 EUR) are redeemed within 6 months. Greater investments than those mentioned will take up to one year. Once redemption notice is received, the investment is frozen with zero return until redemption is payoff.

4. Minimum for subscription?

If a bank/financial institution is the final client, there is no minimum investment. If a private individual invests personally, the minimum investment is 40,000 EUR. However, if a bank/financial institution acts on behalf of its clients and intends to deposit them onto their accounts then the minimum investment must be no less than 125,000 EUR as we will be unable to conduct KYC and to determine investment profile of each such client. The entry fees apply to - however with investment over 250,000 EUR the fees are zero.

5. What's the Settlement period / Do you require Prepayment and for which value date?

The settlement can be without money or versus money (RFP/DFP or RVP/DVP). All we need to agree is the volume to notify the Prague stock exchange where the Fund is being traded and Central Securities Depository Prague. It should take longer than a few days, max 10 working days (due to the notification period ).

6. Are they some redemption penalty fee or lock-up period?

No lock-up and no exit fees apply.

7. Do you calculate performance fee?

Yes, it is set up for IRR greater than 10% (see more details in prospectus of the fund). It is being calculated but we have not reached such levels yet. The performance fee is calculated annually as 30% from the amount of financial means generated by the Fund after taxation in the excess of IRR 10%. Maximum total expense ratio of the Fund including any other costs shall not exceed 1.95 % of the average annual value of the equity capital of the Fund. The temporary internal rate of return - IRR is annually calculated by the same expert who prepared the expert valuation required by the regulator and is audited by the fund auditor.

8. The fund performance and the return for investors

Performance of the fund and its return are calculated monthly and the respective financial statements are produced to that effect. No less than once a year every asset in the fund is revalued by a regulator-appointed expert.

The investment strategy is based on indirect investments in SPVs holding various photo-voltaic plants, biomass and biogas units and it is expanding gradually to diversify to other sources of renewable energy.

As a peripheral type of investments, the Fund will make investments using investment instruments of both domestic financial market and foreign financial markets, i.e. corporate bonds, corporate bills of exchange etc.

9. Number of decimal places allowed for shares

4

10. Switch settlement cycle

In this case there is necessary to apply for Redside’s approval because we as the fund manager must secure that units of the fund are held by the qualified investors only (the Czech law must-have condition).

11. Cut-off to send in orders for subscription, redemption & switch

Subscription /redemption and switch notices can be sent every workday till 5 p.m.

12. Minimum amount for initial individual subscription

40.000 EUR or 1.000.000 CKZ if the investor proves awareness of investment skills by fulfilling the investor profile questionnaire. This questionnaire will be assessed by Redside. However, if a bank/financial institution acts on behalf of its clients and intends to deposit them onto their accounts then the minimum investment must be no less than 125,000 EUR as we will be unable to conduct KYC and to determine investment profile of each such client.

13. Minimum amount for next subscription

Not determined

14. Trading fax number

+420 224 931 368

15. Is trading via swift allowed for all type of orders (subscription, redemption and switch) . If yes, please provide us the swift code of the trading.

Trading via swift in not allowed

16. Dealing day

From 10th workday in month.

17. Subscription order format method: Amount/Quantity or BOTH

Amount

18. Redemption order format method: Amount/Quantity or BOTH

Quantity

19. Payment details / (Please provide the latest Application Form)

  • Final beneficiary account name:

NOVA Green Energy otevřený podílový fond REDSIDE investiční společnost, a.s.

  • Final beneficiary account number:

CZK account: IBAN CZ9327000000002110984871
EUR account: IBAN CZ4327000000002110984898

  • Bank:

UniCredit Bank Czech Republic and Slovakia, a.s.

BACX CZ PP